Gillard reshuffles ministry

Prime Minister Julia Gillard says her new ministerial line-up will give Labor new energy and fire power heading into 2012.

Gillard announced a widely-tipped reshuffle on Monday, which includes extra portfolio responsibilities of industry and innovation for Climate Change Minister Greg Combet.

"With this new cabinet in place we will see an important mix of new energy, as well as wise heads and experienced heads," she told reporters in Canberra.

"This will give us the focus and fire power that we need in 2012."

Earlier Small Business Minister Nick Sherry preceded Gillard's formal announcement by confirming he was stepping down from the ministry.

He will retire from federal politics after the next election, likely to be in 2013.

Other winners from the reshuffle are Bill Shorten, Tanya Plibersek and Mark Butler all of whom have been promoted to cabinet.

Tasmanian MP Julie Collins has been promoted to the ministry and will look after community services, indigenous employment and economic development, the status of women.

Previously she was a parliamentary secretary for community services.

Mark Arbib has been promoted to the position of assistant treasurer and minister for small business, as well as retaining the sport portfolio.

Gillard said Senator Arbib would help sharpen the focus of people wanting to start the own small business.

"I will be looking to Mark Arbib ... to be in touch with the needs of our small business community and for being in touch with Australians who see their future being creating their own small business," she said.

Shorten is promoted to cabinet as the employment and workplace relations minister, replacing Chris Evans.

"I have asked Bill not only to focus on our Fair Work agenda ... but to also broaden our description and thinking about workplace relations," Gillard said.

"So it deepens our national understanding of how workplaces are changing and the challenges for work and family life as that change occur."

Tanya Plibersek will join cabinet as the new health minister.

She was formerly human services and social inclusion minister.

Mental Health and Ageing Minister Mark Butler retains his position but will join cabinet.

He will also take on social inclusion responsibilities.

Brendan O'Connor will join the early childhood and education team of School Education Minister Peter Garrett and Childcare Minister Kate Ellis.

O'Connor will assist Garrett with the 2012 implementation of the government's response to the Gonski review of school funding.

He will also take over the human services portfolio, replacing Plibersek.

Nicola Roxon has been named attorney-general, replacing Robert McClelland who will remain in cabinet as emergency services minister.

"Her first love was law," Gillard said of the outgoing health minister.

"She will be the first woman in the nation's history to serve in that role and I know that she will do it with distinction."

Gillard said the changes would mean an expansion of the cabinet from 20 to 22.

Gillard said McClelland's appointment to emergency services was a sign of her determination to have a minister at the highest level responsible for the commonwealth's response to natural disasters.

He also has responsibility for housing.

Kim Carr becomes manufacturing and defence materiel minister, but is demoted to the outer ministry.

Gillard denied she was forced to expand the size of cabinet because people would not step down.

She said the increase was caused by the growth in the breadth of the government's reform priorities.

The reshuffle was about ensuring the government's reform areas were reflected around the cabinet table, the prime minister said.

Combet will head up a newly-expanded Department of Industry, Innovation, Science, Research and Tertiary Education.

Senator Evans will have responsibilities for tertiary education, skills, science and research.

He retains his cabinet post along with his existing role as government leader in the Senate.

"This new portfolio will mean better links between industry, innovation, science, research and tertiary education," Gillard said.

The new portfolio also is responsible for international education given the importance of higher education and vocational education and training to this sector.

Jenny Macklin will remain the families, community services and indigenous affairs minister while taking on responsibility for disability reform.

She will have a lead role in building the national disability insurance scheme.

Gillard rebuffed suggestions by Opposition Leader Tony Abbott that the reshuffle was choreographed so that she would be surrounded by those who backed her as prime minister.

"Tony Abbott is negative about everything, so you know, of course he's negative about the reshuffle," she said.

"I've chosen the people I wanted.

"I've chosen the strongest possible team."

Gillard refused to say whether any of her ministers were unhappy about their appointments, noting that some media speculation on the matter was completely untrue.

Gillard defended her decision to drop Senator Carr from cabinet, saying manufacturing would be represented at the cabinet table by Combet.

"I have restructured the department to focus on the future economy we need to build," she said.

"I want to be building the economy of the future, and I want to make sure that economy is a more diversified one, not a less diversified one as a result of the resources boom."

Gillard said she was aware that many Australians feared that the nation would come out of the resources boom with a narrower economy than it had going into it.

Combet would be able to bring together what he had been doing in clean energy.

Jason Clare is the new home affairs and justice minister.

The Department of Regional Australia, Regional Development and Local Government moves from the prime minister's portfolio to become a stand-alone department for Simon Crean.

Kevin Rudd continues as foreign minister, earning praise from Gillard for doing an "exceptional job".

Treasurer Wayne Swan, Trade Minister Craig Emerson, Defence Minister Stephen Smith and Immigration Minister Chris Bowen retain their jobs.

Paying tribute to Nick Sherry, Gillard acknowledged he had experienced "tremendous personal highs", which included his role as the first minister for superannuation.

The senator also had been through some "tremendous personal lows".

"I think Nick is always going to be remembered as someone in this parliament who showed a great deal of fortitude and determination, even in the most difficult of circumstances," Gillard said.

Senator Sherry will now serve on the backbench as a senator for Tasmania.

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